IQBAL ZAFAR v. HONG YIP SERVICE CO LTD AND ANOTHER

HCPI 809/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES NO. 809 OF 2004

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J U D G M E N T

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Introduction:

1.  On the morning of 24 August 2003, Mr Zafar stepped out of an elevator at the ground floor of the Hong Kong Industrial Centre in Kwai Chung.  He worked, and lived in that building.  The floor was being cleaned with a chemical solution containing corrosive fluid.  Mr Zafar was given no warning of the potential danger, and no barrier was erected to prevent him stepping out of the lift, onto the wet floor.

2.  Mr Zafar slipped and fell, the corrosive fluid wetting his clothes and consequently his body.  A cleaning woman used a wet cloth, itself containing the corrosive fluid, to wipe his face and neck.  As a result of these events Mr Safar suffered chemical burns on his face, eyes, left upper limbs, both lower limbs and his back.  In short, he sustained second-degree chemical burns over 30% of his total body surface.

3.  At the commencement of the trial liability was denied, but on the advice of counsel, liability was sensibly admitted, and the trial proceeded on the basis of an inquiry into quantum alone.

The issues:

4.  In order to resolve the usual heads of damage four particular issues must be resolved first.  The first is the amount of Mr Zafar’s earnings at a time of the accident.  The second is whether or not the provision of accommodation was part of Mr Zafar’s employment package.  The third is whether or not Mr Zafar’s employment was terminated as a result of the accident.  Finally, the amount of his present earnings must be determined.

The amount of Mr Zafar’s pre-accident earnings:

5.  Mr Zafar came to Hong Kong in 1969.  He has lived here for 36 years and can now speak Cantonese and a little English.  He is now aged 56.  In 1972 he began work with Sports Action Development Ltd whose office is on the 10th floor of the Hong Kong Industrial Centre.  He undertook storage work, which involved lifting heavy objects and was also a deliveryman.  In 1991 his employer offered him the opportunity to live in the premises.  Mr Zafar was not formally employed as a night watchman, for he was entitled to sleep on the premises.  However it was understood that he would undertake duties similar to those of the night watchman, ensuring doors were locked, lights were out and the like.

6.  At the time of the accident, and at the time of the termination of his employment, Mr Zafar was employed under a written employment contract made on 1 November 2001.  The contract provided that Mr Zafar’s salary would be $6,000 per month.  However it was Mr Zafar’s evidence that in fact he was paid $8,000 a month, $6,000 per month being deposited to his bank account, and the balance of $2,000 being paid in cash.  He said that his employer told him that the balance was paid in cash for taxation reasons.

7.  Mr Safar also said that he was paid an annual bonus, at Lunar New Year, which was around $6,000 each year.  Again there is no documentary evidence of this payment.

8.  Mr Lam has made a strong challenge to Mr Zafar’s assertion that his income was $8,000 per month, and as to the bonus.  He relies upon a number of inconsistencies in the evidence to say that Mr Zafar’s evidence ought not to be accepted, and that the court ought to rely upon the contractual document put in evidence.

9.  First it is said that in his witness statement Mr Zafar asserts only to an income of $6,000 per month.  That is right, but that witness statement was made in January this year.  In the course of pleadings prior to that, in two separate Statements of Damages filed on Mr Zafar’s behalf his income was stated to be $8,000 per month.  Plainly, the only source of information that his income was $8,000 a month was Mr Zafar.  That must have been his initial instruction to his solicitors.  On 3 May 2005, Mr Zafar’s solicitors wrote to the defendants’ solicitors pointing out that there was an error in the witness statement and clarifying that the income was $8,000 per month and the manner of payment. 

10.  In cross-examination Mr Zafar explained that the statement in his witness statement was made because he did not have documentary proof of the additional payment of $2,000.  The evidence did not explore precisely how he came to that view.  He may have come to that view of his own accord, a situation I find unlikely, bearing in mind that he is an unsophisticated man who is unlikely to have any appreciation of the need for documentary evidence to substantiate the claim.  He may have come to that view as a result of advice from a lawyer’s clerk assisting him to prepare his witness statement, the situation I find quite likely.

11.  I do not need to find the means by which he came to that view.  By whichever means he came to it, the view he held is plainly wrong.  It is not a requirement of law that there must be documentary evidence to support a claim for damages for loss of earnings.  How much a person earns will always be a matter for the court to determine on the basis of the whole of the evidence.  In appropriate circumstances a mere assertion may be acceptable.  In so holding I do not disregard the decision of the Court of Appeal in World Realty Ltd v Kwan Ngar Yin [1987] 3 HKC 148.  The circumstances there were very different.  The case involved loss of business profits in which no books or accounts at all were produced in evidence.  Notwithstanding the lack of books judgement was still entered for the plaintiff.  There must always be circumstances where the court will, at the end of the day, be required to assess the credibility of an oral assertion in circumstances where no document exists.  Whether documentary evidence will be required to prove particular facts will always depend upon the circumstances and the particular facts at issue.

12.  It is right, as Mr Zafar accepted, that the sum is important to the claim.  It makes a substantial difference to the end result.  I do not find that it is inherently incredible that he would omit the sum simply because there was no supporting evidence.  It is perfectly believable however that he would unquestioningly accept advice from a solicitor or a clerk, albeit wrong advice, that the sum could not be claimed in the absence of proof that it was paid, and then proceed to make the assertion of the lower sum that he did in the witness statement.  That is particularly consistent with a man of Mr Zafar’s character, which I find to be honest and straightforward and hard working.

13.  It is right too that the payment is inconsistent with his employment contract.  But that follows inevitably, if the payment was in cash.  It was submitted that it could not be made in cash for tax purposes because it does not make sense to understate salaries.  While superficially attractive, the submission proceeds on the assumption that declared income was the source of payment, and assumption that cannot be safely made.  The submission that the explanation “amounts to a serious allegation of tax evasion, a criminal offence” against his former employer is best seen in perspective of the payment itself, only $2000 per month.  It would be unlikely to attract the interest of the Revenue.

14.  Finally it was submitted that it was inherently improbable that such a cash payment would be made to a man who already received free accommodation.  Mr Zafar had worked in the same employment for many years.  He was obviously valued by his employer.  There still are some employers who value their employees to a sufficient extent that they are prepared to be modestly generous.

15.  Mr Zafar had worked for the same employer for nearly 20 years.  He had been employed through a period when the payment of a Lunar New Year bonus was the norm.  I have no reason at all to doubt Mr Zafar’s evidence that he was previously paid an annual bonus.

16.  Having regard to all of these factors I am satisfied on the balance of probabilities that time of the accident, and at the time of the termination of his employment Mr Zafar’s salary was $8,000 per month.  I accept Mr Zafar’s evidence that he was paid that bonus, which I am satisfied was in the order of $6,000 per year.

Mr Zafar’s accommodation:

17.  It was contended by Mr Lam that Mr Zafar’s accommodation was not part of his employment package and ought not be taken into account in the assessment of damages.  It is right that there was nothing in the written contract in relation to the accommodation.

18.  Other than that submission, and a general attack on Mr Zafar’s credibility, there was nothing in the evidence upon which it could be contended that he did not have the accommodation as part of his employment.  I am quite satisfied that he did live in the building, on the terms he described, and that the accommodation was part of his employment package.  Not only did that get him rent free accommodation, a highly valued commodity in Hong Kong, but it also gave him privacy, and the opportunity to live by himself, as he wished, and not with the inevitable restrictions that are imposed on one who is required to share accommodation with others.  It is difficult to place a monetary value on that privacy, but it is undoubtedly a most attractive and valuable supplement to his employment.

19.  Following the accident, and his return to work, Mr Zafar’s physical restrictions resulted in his employer placing him on light duties, and although he continued to be able to live in the premises, the cash payment of $2,000 per month was terminated.  That is a loss for which he must be compensated.

The reason for the termination of Mr Zafar’s employment:

20.  As a result of the accident Mr Zafar has unfortunately been left with a quite unsightly hypertrophic scar on the left side of his neck.  He finds it embarrassing, and his evidence was that those with whom he worked did not like looking at it.  Mr Zafar said in evidence that he believed that his employment was terminated in December 2004, because of the unsightly scarring.  Mr Lam submitted that the true reason for Mr Zafar’s termination was a restructuring of Sports Action Development, that being the reason in the letter of termination.

21.  It was argued that it was quite inconsistent of a good employer, who had been prepared to give Mr Zafar the benefits he had, to dismiss him for the superficial reason of an unattractive scar.  That is right, but Mr Zafar said that his employer’s wife, who he said did not like him, prompted the termination.  It was submitted that there was no evidence that her dislike was related to the scarring.  That was plainly not right, when the evidence is viewed in its whole context.  It is entirely believable that persons working in an office in Kwai Chung would find scarring such as Mr Zafar’s unpleasant and not wish to be exposed to it.  It is equally believable, in those circumstances, that an employer’s wife would bring pressure to bear on her husband to remove an unsightly employee.

22.  It is hardly likely that the real reason for the termination would be given in the termination letter.  The fact that Hong Kong now has laws against discrimination is sufficiently widely known, but in any event, it is highly unlikely that any employer would ever state in writing that an employee has been terminated because of his appearance.

23.  Mr Lam argued that Mr Zafar could not challenge the termination letter, it being his own document.  That, Mr Lam argued, was a consequence of the relaxation of the rules against hearsay in civil proceedings.

24.  I am satisfied that the termination letter was not produced by Mr Zafar to prove the truth of the reason why his employment was terminated.  The letter proves the fact of termination and the reason that was given to Mr Zafar.  Mr Zafar was perfectly entitled to give evidence as to his belief as to the true reason for his termination.  It is right that that issue was not appropriately dealt with, as it should have been, in Mr Zafar’s witness statement.  But that often happens, and it is common for a witness statement to be supplemented at trial.  Had an application been made to call evidence to contradict that supplementary evidence I would have been obliged to adjourn the trial for that purpose.  But no such application was made.  It is clear from the papers that the defendants’ solicitors have been in contact with Mr Zafar’s former employer.  They could, if they wished, in the light of the supplementary evidence, have sought to call the employer.  They did not.

25.  In addition to his scarring Mr Zafar’s ability to undertake heavy lifting has been affected by the accident.  I am satisfied from the medical evidence that that is as a consequence of the accident, for in addition to the chemical burns Mr Zafar struck his head in the fall and sustained injuries to his neck and lower back.  A restriction in ability to undertake heavy lifting is entirely consistent with such injuries and was accepted by Dr Brian Choa.  Mr Zafar’s ability to lift heavy weights is also restricted by the scarring.  Any stretching of the scars creates tautness in the skin, which restricts movement.  Heavy lifting necessarily involves stretching, and consequently a restriction on Mr Zafar’s ability to lift heavy items.

26.  Mr Zafar saw Dr Choa on 9 August 2004, about four months before his employment was terminated.  In the course of interview Mr Zafar told Dr Choa that he believed that it was a matter of time before he was dismissed.  That was a statement made in the context of an interview by a doctor with a patient, in which the nature of the scarring and the extent of the injuries and the consequence of those injuries were being discussed.  The plain inference is that Mr Zafar anticipated, from the reaction of others to his scarring and the reduction in his duties, that his services would soon no longer be required.

27.  Weighing all of these matters, and bearing in mind the appropriate standard of proof, I am satisfied that Mr Zafar’s employment was terminated as a consequence of the injuries he suffered in the accident.

Mr Zafar’s present income:

28.  Soon after his termination Mr Zafar found a job as a security guard.  The employment commenced on 15 January 2005.  He says his income is now $5,000 per month.  He has produced a certificate from his employer to that effect.  The certificate does not accord precisely with the deposits that were made into Mr Zafar’s bank account for the first four months of this year.  The first deposit is $4,290.30.  Mr Zafar explains the reduction by saying that he had taken time off for medical care.  The second deposit is $8,000.  Mr Zafar says that the employer made a mistake and paid the amount that had been paid to his predecessor.  Mr Zafar says that the employer said that he need not repay the excess.  The third deposit was for $6,864.  Mr Safar said the increase was because somebody else was absent and he worked extra duties.  The third deposit was $4,909.  Again Mr Zafar says that he took time off for medical care and his pay was reduced.

29.  Mr Lam submitted that these explanations should not be accepted and that the average of the four deposits, $6,000 was more likely the true wage and being paid to Mr Zafar.  Mr Lam said that I was simply unbelievable that the employer would not demand a refund of the overpayment.  I do not find the unbelievable.  First, it occurred at about the time of the Lunar New Year, and that may have had an influence on the employer.  Second, the employer may well have been aware of the restrictions contained in s 32, Employment Ordinance, Cap 57, upon making deductions from employee’s wages.  While those restrictions do not prevent a deduction they limit the employer’s ability to make an immediate recovery.

30.  I have listened carefully to Mr Zafar’s explanations as to the differences.  Mr Zafar is a straightforward and unsophisticated man.  He is hard working, and unlike so many plaintiffs in similar situations, when his employment was terminated he took immediate steps to retrain, obtain a qualification, and get new employment.  I find him to be an honest man.  I accept his evidence and the explanation is that he has given.

31.  I find that at the present time his monthly income is $5,000.

PSLA:

32.  The cosmetic and physical effects of the burns, injuries and scars suffered by Mr Zafar are detailed in the expert reports of Dr Ian Nicholson and Dr Brian Choa, together with comprehensive photographs showing his condition soon after the accident, and recently.  There is no doubt that the residual scarring is extensive and singularly unattractive.

33.  I accept completely that the scarring will have had an adverse effect on Mr Zafar’s private life with his wife.  I accept also that having regard to the extent of the scarring Mr Zafar would find it very uncomfortable to go swimming as he used to, or to wear clothing, which exposed the extent of the scarring.  There is little he can do to hide the hypertrophic neck scar, particularly during the many hot months of a Hong Kong summer, a situation that will not improve at all on his retirement when he intends to return to Pakistan.

34.  He suffers low back pain.  The scarring on his body restricts his movement as it goes taut when stretched.  His left eye tends to water when it is hot and windy causing him pain.  There is no doubt that he has suffered a significant physical and cosmetic disability as a result of the accident.

35.  I am satisfied that injuries of this nature fall just below the bottom of the Serious Injury category, from which the appropriate award is accepted mail to be $460,000.  I have had regard to the authorities cited.  I award the sum of $400,000.

Loss of earnings:

36.  I have concluded, for the reasons given, that at the time of the accident, and at the time of his termination Mr Zafar was earning $8,000 per month, and that he received an annual bonus of $6,000.  His annual income was accordingly $102,000.  His income now is $5,000 per month.  There is no suggestion that in his current employment he will be entitled to an annual bonus.  I find his monthly loss of earnings since his resumption of work on 12 January 2005, to be $3,500 per month.  In addition, as a result of the accident, his income was reduced by the cash payment of $2,000 per month over a period of 16 months.

37.  Mr Sakhrani submitted that on the basis of Mr Zafar’s evidence that he felt at risk of losing his present job, and having to take time off for surgery, his future loss of earnings should be assessed on the basis that he would only be able to find a job earning $3,000 per month.  In my view is the suggestion that Mr Zafar’s earning loss will go to this extent is speculative and not justified.

38.  I find the monthly income loss to be $3,500.  Where appropriate I have made an adjustment for the loss of MPF contributions by the employer. The agreed multiplier is 5.  The appropriate calculations are:

(i)	$2,000 x 16 months	$32,000
(ii)	1.1.05-14-1-05: (14 days)
	($6,000 x 14/30 x 105%) + ($2,000 x 14/30) =	$3,873
(iii)	15.1.05-31.1.05 (16 days)
	($6,000 - $5,000 x 16/30 x 105%) + ($2,000 x 16/30) =	$1,626
(iv)	Feb 05 to Sept 05, (8 months)
	($6,000 - $5,000 x 8 x 105%) + ($2,000 x 8) =	$24,400
(v)	Future loss of earnings from trial, Oct 05 x 5 years:
	($6,000 - $5,000 x 105% x 12 x 5) + ($2,000 x 12 x 5) =	$183,000
Total loss of earnings:		$244,899	.

Loss of accommodation benefit:

39.  I have concluded that it was part of Mr Zafar’s employment package that he was provided with accommodation at his place of work.  Two particular benefits flowed from that accommodation.  First, although the accommodation was modest in the extreme, it was private accommodation, an attribute I find to be especially valuable.  Mr Sakhrani put the cost of a small flat for one person in the Kwai Chung area at $5,000 a month.  Mr Lam did not quibble with that, but said that such a flat would be a marked improvement on the conditions of accommodation.  I think that is right.  The law as that in the event of betterment, a deduction must be made from the claim for the value of betterment.

40.  Mr Zafar now shares accommodation with three other men for which he pays $1,200 a month, including utilities.  His claim also included shared food, of $800 a month putting his cost of accommodation at $2,000 per month.  Plainly he cannot include the food cost, that being the cost that is incurred in the event.  The shared accommodation does not have the advantage of privacy and is not as good as the accommodation he has lost.  Weighing all matters I fix the value of the loss of accommodation at $3,500 per month.  This loss must be multiplied by the agreed multiplier together with the first nine months of 2005, being the period prior to trial during which the benefit was lost.

41.  The appropriate calculation is:

$3,500 x 12 x 69 months = $241,500.00.

The claim for travelling expenses:

42.  The second benefit from living and working at his place of employment, meant that he had the advantage of not incurring travelling expenses to work.  That is a valuable benefit and needs to be quantified in money terms when assessing his loss.  The only job that Mr Zafar has been able to find is at Stanley, a long journey from the accommodation he now has in Kwai Chung.  The cost presently being incurred by Mr Zafar is $1,040 per month.  The journey he is undertaking is probably the longest journey he could undertake in Hong Kong from Kwai Chung.

43.  In my view the quantification of the benefit of not incurring travelling expenses ought not to be upon the basis of the longest journey but a mid range.  Taking a broad view of the matter I fix the loss of the benefit at $600 per month. On this head I award $36,000, which sum includes pre-trial losses.

Loss of earning capacity:

44.  I am satisfied that this is an appropriate case for a payment for loss of earning capacity.  That Mr Zafar lost earning capacity was demonstrated by his being placed on light duties following his return to work and the termination of the monthly $2,000 cash payment.  Mr Zafar’s capacity for work is demonstrated by the fact that in previous and good times he had been able to earn as much as $12,000 a month.  Had he been able to remain in his former job, with the return of economic improvement to Hong Kong, he could well have looked forward to salary increases.  His limited capacity now will deny those to him.

45.  Mr Zafar as a man of limited education and is obliged to seek work involving physical labour at the bottom end of the employment chain.  A physical restriction on such a man is a much greater barrier to good employment than it is on an educated man who is not required to have a course to hard physical labour.  Mr Sakhrani seeks $60,000.  I agree that the sum is modest and it is appropriate.

Future medical treatment:

46.  Mr Zafar will shortly be required to undergo an operation to repair the hypertrophic scar on his neck.  This will not improve his physical appearance that is designed to repair the scar, which has become infected and is bleeding.  The operation carries with it a risk that the scarring will be aggravated but it is a risk that Mr Zafar must.  He has been advised by his doctors to undertake a course of physiotherapy, together with anti-inflammatory drugs, which will improve his physical ability.  While he has been given that advice it appears that has not been properly followed up, either by his doctors or by his legal advisors because his evidence was that he did not understand what physiotherapy was or what it could do for him.  Were that properly explained to him I have no doubt that he would undergo that physiotherapy, the cost of which has been put at $30,000.

47.  He has also been advised to undertake a course of cortisone injections at a cost of $22,000.  However his clear evidence was that even if he had the money he would not undertake those injections.

48.  He will be required to take some time off, both for the surgery he is to undertake and for physiotherapy.  Taking a broad view of the matter I award the sum of $35,000 for future medical expenses.

Summary:

49.  The total damages awarded are as follows:

PSLA	$400,000.00
Loss of earnings	$244,899.00
Loss of accommodation benefit	$241,500.00
Loss of travel benefit	$36,000.00
Loss of earning capacity	$60,000.00
Future medical expenses	$35,000.00
Total damages	$1,017,399.00

50.  There will be judgement for the plaintiff in the sum of $1,017,399.00, with interest on general damages at 2% per annum from the date of the writ, and on special damages at half judgement rate from the date of the accident.  There will be an order nisi for costs to the plaintiff, to be taxed on Legal Aid Regulations and on a party and party basis, which order shall be made absolute in 14 days.  Leave is reserved to apply.